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Reverse logistics tool reduces losses on retail returns.

Monday, April 2nd, 2012

The Chartered Institute of Management Accounting (CIMA) and The American Institute of Certified Public Accountants (AICPA) have just launched a Global Joint Venture called Chartered Global Management Accountants (CGMA), a new professional designation for Management Accountants. The CGMA is designed to elevate management accounting and further emphasise its importance for businesses worldwide.

The Management School’s Reverse Logistics Toolkit, developed in collaboration with Cranfield University, is one of only twelve toolkits selected to feature on the CGMA website.

As a significant percentage of products are returned by customers, reverse logistics has become an area that retailers and manufacturers cannot ignore. Reverse logistics is a broad area and the tool focuses on the management of retail returns. In particular the tool views the management of the reverse logistics process from a holistic supply chain approach rather than simply starting after the point of sale.

Despite the fact that managing returns incurs substantial costs through logistics, inventory and disposal, many companies have inadequate processes for dealing with them. The improved management of returns can have a significant impact on bottom line performance.

It can also have a significant impact on environmental concerns, since reverse logistics operations involve transportation and, therefore, CO2 emissions. The tool enables companies to audit their returns management activities and identify where opportunities exist to reduce costs and waste and improve customer service.

Chartered Global Management Accountants can play an important role in this area by using their analytical skills to highlight the financial benefits to be gained from making improvements to reverse logistics processes and by recognising the importance of supply chain accounting and inter-organisational accounting. Techniques such as quality costing and transparent performance measurement systems have a significant role to play. Many of the diagnostic and performance aspects of the tool are based on activities taking place across organisational boundaries with particular emphasis on relationships with suppliers and customers.

The tool covers cost and performance management, avoidance of product returns, process management, the physical network, inventory management, information and communication technology, material handling, containers, sustainable distribution and compliance with legislation.

For more information about the Management School’s Logistics and Supply Chain Management research, please see http://www.shef.ac.uk/lscm/index

For more information regarding the Reverse Logistics Tool, please contact Professor John Cullen at john.cullen@sheffield.ac.uk

www.shef.ac.uk/management/staff/cullen